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The SEIKI trademark was recently granted registration in Singapore despite an opposition from the proprietors of the SEIKO mark. The Registrar dismissed the opposition despite finding that SEIKO is a well-known mark and that the two marks are similar. A closer examination of the Registrar’s reasoning, however, reveals that the decision is not as incongruous as it may seem at first glance.

The mark SEIKI (“century” or “regular” in Japanese) has been used by Choice Fortune Holdings since 2010. Choice sought to register the SEIKI mark for Class 9 with respect to televisions and disc drives.

On the other hand, the mark SEIKO (“success” or “precise workmanship” in Japanese) has been used by Seiko Kabushiki Kaisha since 1924. The said mark is registered in Singapore in Class 9 with respect to a variety of goods, including apparatus for recording, transmission or reproduction of sound or images magnetic data carriers, recording discs.

The opposition in this instance was based on the following grounds:

1. The similarity of the SEIKI mark to the earlier-in-time SEIKO mark registrations, as per Section 8(2)(b) of the Singapore Trademark Act, and
2. The unfair dilution of the earlier-in- time, well-known “SEIKO” mark(s), as per Section 8(4)(ii)(A) the Singapore Trademark Act.
Similarity to an earlier trademark

The Registrar considered the similarity of the marks and the similarity of the goods before considering the likelihood that confusion would occur. However, the Registrar’s decision was primarily influenced by extraneous factors.

The Registrar firstly concluded that the contending marks were ‘marginally’ similar when viewed in their totality for the following reasons: (i) the marks are only visually similar to a low degree despite a single differing letter; (ii) the marks are aurally similar to a low degree despite a single differing vowel; and (iii) the marks are not conceptually similar despite sharing similar origins (i.e. merely being ‘Japanese’ in origin was not enough as the feature would have different connotations for different users).

The Registrar further concluded that the goods covered by the contending marks overlap with each other.

Lastly, despite concluding that the marks and the goods were similar, the Registrar determined that there was no reasonable likelihood of confusion. This was because the average consumer could reasonably be expected to devote considerable attention to the selection and purchase of the goods with respect to which the said marks are used. The relatively high cost of said goods makes the probability of confusion rather unlikely.

Dilution of a well-known mark

In Singapore, proprietors of well-known marks have a right to prevent the dilution of their marks, even if there is no likelihood of confusion. However, as illustrated below, proprietors would be well-advised to resort to this ground only if they are capable of establishing that the SEIKI mark will call to mind the SEIKO mark.

In the present case, Seiko failed to establish that dilution would occur due to use of the SEIKI mark in relation to televisions and disc drives as (i) the marks were only marginally similar when observed in totality; (ii) there was little similarity between the Application goods and the goods for which the SEIKO mark was well-known in Singapore (i.e. timepieces); and (iii) it was therefore not ‘extremely likely’ that consumers would connect the SEIKI mark to the SEIKO mark.

In conclusion, a successful opposition does not simply rest on the similarity between the marks and the goods claimed. Rather, due consideration should be given to the various other factors which may have an impact on the likelihood of confusion requirement.

Additionally, it should be stressed that the dilution ground requires the opponent to prove similarity with respect to the goods for which the mark is well-known as opposed to the goods for which the mark is registered. Proprietors should thus be cautious not to commit to such proceedings merely upon the basis of their mark registrations and may wish to conduct thorough preliminary market surveys before opposing an application on the said ground.

 

This article first appeared in Asia IP. For further information please visit http://www.asiaiplaw.com.

 

 

 

 

 

 

“Mango” is commonly known as the juicy stone fruit belonging to the genus Mangifera. But to others, it means more. To Consolidated Artists BV, “Mango” is a trademark symbolic of quality bags, fashion and accessories. Recently, MANGO has been the subject of a dispute before the Office of the Director General (ODG) of the Intellectual Property Office of the Philippines (IPOPHL). In February 2014, the office dismissed an appeal and upheld the resolution of the Director of the Bureau of Legal Affairs (BLA) sustaining the opposition to Ariston Commercial, Inc.’s application to register the mark MANGO.

The conundrum started on November 11, 2002, when Ariston filed an application to register the mark MANGO under Class 14 specifically for watches. The trademark application was published in the IPOPHL Official Gazette on August 18, 2004. Consolidated Artists opposed the registration of MANGO by Ariston alleging that it will be damaged by the registration. In its opposition, Consolidated Artists claims that it is the prior user of the mark MANGO for jewelry, and that it was issued Registration No. 4-1997-120403 on April 12, 2002, for goods under Class 25, which includes, among others clothing, hat, footwear, shoes, sandals and slippers. Ariston, on the other hand, maintained that it was the first to file the application for registration of the mark MANGO for watches under Class 14 and that it has prior commercial use of this mark for watches.

The Director of BLA initially denied the opposition. However, upon motion for reconsideration, the earlier decision was set aside and the opposition was sustained. The BLA had ruled that Consolidated Artists had better rights over the mark MANGO as it had proven its ownership and prior use of the mark.

Aggrieved, Ariston filed an appeal. The ODG dismissed the appeal finding that at the time Ariston filed its application to register MANGO for watches under Class 14, Consolidated Artists was already granted registration for this mark under Class 25. The fact that Ariston sought to register the mark for different goods (watches) was not sufficient to convince the Director of the ODG that the allowance of Ariston’s trademark application for MANGO would be unlikely to cause confusion. While Ariston’s goods are different from the goods covered by Consolidated Artists’ certificate of registration, the former’s products may be assumed to originate from the latter.

This decision is consistent with the concept of “confusion of business,” reiterated in a long line of cases decided by the Supreme Court. Although the goods of the parties are different, the defendant’s product is such as might reasonably be assumed to originate from the plaintiff, and the public would then be deceived either into that belief or into the belief that there is some connection between the plaintiff and defendant which, in fact, does not exist. Therefore, such registration may likely cause damage to Consolidated Artists who has no control on the quality of Ariston’s products. (Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaf (G.R. No. L-19906), for example.)

While MANGO may be an ordinary term, once registered as a trademark, it becomes protected by the IP Code. Thus, not even parallel registration or intra-parallel registration (registration of same marks applied on the same goods) would be allowed to unfavorably ride on the popularity and goodwill that the mark has earned.

The ODG made a definitive ruling that the mark MANGO as used by Consolidated Artists is an arbitrary mark and it is, thus, surprising and is unlikely a coincidence that Ariston could come up with an identical mark. As in all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms and combinations of letters and designs available, Ariston had to come up with a mark so closely similar to another’s mark if there was no intent to take advantage of the goodwill generated by the other mark. At the time of this writing, no appeal is known to have been filed for this case.

While the mark MANGO was not declared an internationally well-known mark, the ODG sought to prevent parallel and intra-parallel registration by sustaining the opposition filed by Consolidated Artists. This ruling is significant because it clarifies that prior filing and use of an arbitrary mark in the Philippines does not immediately guarantee registration especially so if the mark has been appropriated and registered by another entity. While the IP Code allows the co-existence of similar marks (parallel registration) covering different classes of goods and services, the rule is not absolute considering that allowing registration of the junior mark greatly depends on a number of factors including the goodwill earned by the mark itself.

 

 

 

 

 

 

 

 

 A Performance Pledge for Intellectual Property Registration was introduced by the Intellectual Property Office of Singapore (IPOS) on 4 August 2014.

For patents, a grant of a Singapore patent application may be obtained within 12 months from the date of filing the application if certain requirements are met. The requirements are as follows:


1.    The application is first filed in Singapore or validly claims priority under Section 17 of the Singapore Patents Act from an earlier patent  application;
2.    Required filing form and complete patent specification are filed, and prescribed fee is paid;
3.    Request for search and examination report is filed and prescribed fee is paid on the same day the application is filed;
4.    Clear Formalities Examination Report is issued;
5.    A favourable search and examination report is issued after first round of search and examination;
6.    Grant fee is paid within 2 months from the date of issuance of notice of eligibility for grant;
7.    For Singapore applications first filed at IPOS, request for early publication is filed on the same day the grant fee is paid; and
8.    The specific time limits for action are followed by the patent applicant.


Apart from the above, IPOS has also pledged to adjudicate 90% of cases within 4 months from the time they are ready for full hearings; and for straightforward cases, to issue Grounds of Decision within 6 months from the conclusion of full hearings.

 

 

 

 

 

 

 

In Converse Inc. v. Ramesh Ramchandani et al., Converse had elected to request an award of statutory damages after an interlocutory judgment had found Mr. Ramchandani liable for infringing Converse’s high-cut Chuck Taylor All Star canvas shoes. Accordingly, the High Court of Singapore was given the unfamiliar task of assessing the amount of statutory damages to be awarded under Section 31(5) and (6) of the Trade Marks Act.

In 2004, the Trade Marks Act was amended to include statutory damages as an alternative measure for situations where it was difficult to prove actual losses or obtain an account of profits. This addressed the frustrating situation where a plaintiff would be deprived of adequate compensation because of an infringer’s refusal or failure to cooperate.

The introduction of Section 31(5) to the Trade Marks Act gives the court broad discretion to award the appropriate amount of damages, with a prescribed maximum amount of SGD 100,000 for each type of infringing good or service. Section 31(6) lays out the factors that the courts must consider when determining the amount of damages to be awarded. The flagrancy of the infringement, the loss suffered by the plaintiff, the benefit accrued by the defendant and the need to deter other similar instances of infringement are factors for the courts to consider.

Applying these factors to the factual matrix of this case, the court first considered the loss suffered by the plaintiff in combination with the benefits accrued by the defendants. Both tangible and intangible factors were taken into account, including loss of reputation of the plaintiff’s brand and loss of potential profits. Second, the flagrancy of the offense was considered. This involved an examination by the court of the conduct of defendant Ramchandani and the role he played in enabling the infringing activities. Last, the court considered the need to deter infringement. Interestingly, the court decided that well-known brands were more deserving of protection, because, after the plaintiff had spent millions of dollars in promotional activities, it was tempting and easy for counterfeiters to ride on the plaintiff’s efforts and deprive the plaintiff of the fruits of its labor.

In conclusion, the court decided that an award for the maximum amount of SGD 100,000 would be appropriate as compensation to Converse. (Converse Inc. v. Ramesh Ramchandani et al., [2014] SGHCR 11 (May 23, 2014).)

This precedent opens up an alternative and cost-effective measure that brand owners may consider in situations where it is difficult to account for lost profits.


This article first appeared in the INTA Bulletin. For further information please visit http://www.inta.org/INTABulletin/Pages/INTABulletin.aspx.

 

 

 

 

 

 

 

 

 

 

The decision by the Intellectual Property Office of Singapore (IPOS) in Carolina Herrera, Ltd v. Lacoste ([2014] SGIPOS 3 (Feb. 20, 2014)) shows that the Registry may not be exceedingly enthusiastic about allowing a trademark proprietor to claim exclusive rights over a common element in a family or series of marks by virtue of the trademark registration of these family marks, where the registration of the common element has not been applied for independently.

Lacoste applied for the registration of the mark L.12.12 (see below) for goods in Classes 3, 8 and 25. (Application No. T1100417A, filed Dec. 2, 2010.) Carolina Herrera, Ltd opposed the mark based on its prior-registered series of trademarks, all of which contained the element 212 together with a word element.

The opponent argued that, although it had not applied for the registration of the mark 212 simpliciter, it had the exclusive claim over the common element of the subject mark, that is, 212, by virtue of its earlier trademarks (namely, 212 ON ICE, 212 VIP, 212 SEXY and 212 BY CAROLINA HERRERA). It argued further that the element 212 formed the distinctive and dominant element of its earlier marks, which therefore constituted a series or a family of marks, all containing the element 212; consequently, the public recognized the entire family of marks as belonging to the opponent, and registration of the applicant’s mark would lead to confusion as to the trade origin in the marketplace.

The applicant contended that since the opponent did not register the mark 212 simpliciter, it should not be granted a monopoly over the use of the mark. It argued, further, that the opponent’s marks were never referred to as 212 independently but were always denoted by an additional element (i.e., one of the word elements SEXY, VIP, ON ICE and BY CAROLINE HERRERA). This demonstrated that although 212 formed an element of the opponent’s mark, the public did not recognize 212 simpliciter as belonging to a family or series of marks.

The Registrar of Trade Marks, on a careful assessment of the evidence adduced by both parties and the relevant jurisprudence, held that the opponent did not have the exclusive right over the element 212. She opined that the registration of the marks containing a common element did not ipso facto give rise to a presumption that the public perceived the marks as belonging to a family. In order to claim monopoly over a common feature, the opponent had to advance sufficient evidence that consumers perceived and remembered the marks as belonging to a family of marks, containing common characteristics and associated with each other in terms of source of trade.

In conclusion, the Registrar also held that there was no visual, aural or conceptual similarity between the mark applied for and the opponent’s marks and that the element 212 simpliciter would not be considered an “earlier trademark” under the Trade Marks Act.

 

This article first appeared in the INTA Bulletin.  For further information please visit http://www.inta.org/INTABulletin/Pages/INTABulletin.aspx .

In the early part of 2014, the Intellectual Property Office of the Philippines (IPOPHL) issued Memorandum Circular Nos. 14-002 and 14-003 amending the reckoning date of the annual fee due dates for divisional applications (filed via direct route or PCT) to achieve a uniform procedure in the payment of annual fees for patent applications. The amendments synchronize the annual fee due dates of both the parent application and its divisional application effective 3 March 2015, one year after the issuance date of Circular 14-002.

Under the current practice, the reckoning date for the annual fee of divisional patent applications is the publication date of the divisional application in the IPOPHL e-Gazette regardless of whether the divisional application is derived from a direct route patent application or from an international patent application. Starting 3 March 2015, however, annual fees for divisional applications shall be reckoned from the publication date of the parent application. Hence, for divisional applications derived from an international patent application, the annual fee due date shall be based on the international publication date of the parent application while for direct route divisional applications, the annual fee due date shall be reckoned from the publication date of the parent application in the IPOPHL e-Gazette. If the divisional application was filed more than four (4) years after the publication date of the parent application, payment of annual fees for the divisional application shall commence on the following year from the last year paid in the parent application, and on each subsequent anniversary of such date. The tables below illustrate these changes.

 

                                                            Direct Route Patent Application

Particulars

Parent Patent Application

Divisional Patent Application

Philippines Filing Date

5 January 2010

12 January   2014

Publication Date in the IPOPHL e-Gazette

10 December   2012

Not yet published

ANNUAL FEES

1st

10 December   2016

1st

10 December   2016

2nd

10 December   2017

2nd

10 December   2017

3rd

10 December   2018

3rd

10 December   2018

4th

10 December   2019

4th

10 December   2019

5th

10 December   2020

5th

10 December   2020

6th

10 December   2021

6th

10 December   2021

7th

10 December   2022

7th

10 December   2022

8th

10 December   2023

8th

10 December   2023

9th

10 December   2024

9th

10 December   2024

10th

10 December   2025

10th

10 December   2025

11th

10 December   2026

11th

10 December   2026

12th

10 December   2027

12th

10 December   2027

13th

10 December   2028

13th

10 December   2028

14th

10 December   2029

14th

10 December   2029

 



                                                

                                                                 PCT National Phase Application

Particulars

Parent Patent Application

Divisional Patent Application

International Filing Date

10 August   2010

-

National Phase Entry Date

5 January 2012

20 November   2013

International Publication Date

10 February 2011

-

Publication Date in the

IPOPHL e-Gazette

-

20 April 2014

ANNUAL FEES

1st

10 February 2015

No annual fee due yet

2nd

10 February 2016

1st

10 February   2016

3rd

10 February   2017

2nd

10 February   2017

4th

10 February   2018

3rd

10 February   2018

5th

10 February   2019

4th

10 February   2019

6th

10 February   2020

5th

10 February   2020

7th

10 February   2021

6th

10 February   2021

8th

10 February 2022

7th

10 February   2022

9th

10 February   2023

8th

10 February   2023

10th

10 February   2024

9th

10 February   2024

11th

10 February   2025

10th

10 February   2025

12th

10 February   2026

11th

10 February   2026

13th

10 February   2027

12th

10 February   2027

14th

10 February   2028

13th

10 February   2028

15th

10 February   2029

14th

10 February   2029

16th

10 February   2030

15th

10 February   2030

Multi Access Limited (“Multi Access”) recently succeeded in their claim to cancel the trademark registrations of a local entrepreneur, Dhalim Soekodanu (“Dhalim”), on the ground of bad faith, pursuant to Trademark Law No. 15 of 2001, Article 4.

 multiaccess and dhalim mark

Multi Access is the owner of numerous trademark registrations for 王老吉which is pronounced as WONG LO KAT in Cantonese and WANG LAO JI in Mandarin. It is popularly used for herbal tea products. “Wang” or “Wong” is a Chinese surname which means “King,” “Old” and “Lucky.” The said mark is registered in ­­­­­­­­­­­­­­­Argentina, Australia, Benelux, Botswana, Brazil, Brunei, Canada, Cambodia, Chile, Costa Rica, Croatia, Cuba, Egypt, EU, Germany, Hongkong, Iceland, India, Indonesia, Iran, Iraq, Israel, Italy, Japan, Jordan, Kenya, Kuwait, Laos, Lebanon, Macau, Malaysia, Mexico, Monaco, Morocco, Myanmar, Namibia, New Zealand, Nigeria, Norway, Oman, Pakistan, Panama, Peru, Philippines, Portugal, Korea, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sri Lanka, Sudan, Switzerland, Swiss, Taiwan, Thailand, Turkey, United Arab Emirates, Uganda, America, Britain, Venezuela, Vietnam and Yemen. In Indonesia, it was registered in class 32 as early as 1991.

Dhalim Soekodanu, a local Indonesian entreprenuer, also registered the mark Wang Lao Ji in a different style        

     dhalimin classes 5 and 32 in 2002.

 

In the course of the proceedings, Multi Access argued that the subject registration is similar in appearance, spelling and/or the sound. Further, Multi Access established the well-known status of the Wong Lao Ji trademark by demonstrating the extensive trademark registrations and marketing campaigns conducted in the promotion of the Wong Lao Ji products in many countries, including Indonesia. Evidence submitted by Multi Access included copies of certificates of foreign registrations/applications, advertisement, rewards and favourable trademark cancellation decisions in favour of Multi Access.

In ruling in favor of Multi Access, the Judges of the Central Jakarta Commercial Court declared Wong Lao Ji to be a well-known mark and found Dhalim to have acted in bad faith in hijacking the said mark.

The foregoing decision underscores the policy under Article 6 of the Trademark Law which states that an application shall be rejected if the mark is similar in its essential part or entirety with a well-known mark owned by another party for the same kind of goods or services. Thus, a trademark registration obtained in bad faith will rarely be upheld by the Courts.

Design laws vary by country. Some countries classify designs as patents and some have separate "registered design" or “industrial design” systems. In some countries, designs of products must be whole products in order to be registrable and not parts of products. Some countries allow protection of only part or parts of the product but the said part or parts of the product must be clearly identified in solid lines in the representations while the parts for which protection is not claimed must be indicated by means of dotted or broken lines.

 

A comparison of primary features of design laws in the ASEAN countries is summarized in the table and discussed below.

Country

Term

Novelty

Multiple embodiments

Allowed in one application?

Color

Allowed?

Dashed lines/shading allowed

Indonesia

10 years

Absolute

Yes, but Indonesia has strict “unity of design” requirement. Can file divisional later.

Yes

Dashed lines Yes

Shadings - No

Malaysia

Up to 25 years in 5 year increments

Absolute

Yes, provided all are in the same Locarno class

Yes

Yes

Philippines

Up to 15 years in 5 year increments

Absolute

Yes

Yes

Yes

Singapore

Up to 15 years in 5 year increments

Absolute

No

Yes

Yes

Thailand

10 years

Not published in any country, not known or used in TH

No

Yes

No

Vietnam

Up to 15 years in 5 year increments

Absolute

Yes, but variants must be fully described in disclosure

Yes

No

 

Indonesia

In Indonesia, it is possible to register “creations of forms, configuration or compositions of lines or colors, or lines and colors, or the combination thereof in three dimensional or two dimensional form which give an aesthetical impression.”

Although Indonesia allows multiple embodiments in one application, the embodiments must satisfy the “unity of design” requirement. Should the Examiner find that there is no “unity of design,” the embodiments can be split into separate applications later in the examination stage.

Malaysia
Coverage is allowed under the Design Act for “features of shape, configuration, pattern or ornament applied to an article by any industrial process or means, being features which, in the finished article, appeal to and are judged by the eye.”

While “novelty” is a requirement, no substantive novelty examination is performed prior to registration. A statement of novelty pointing out the portion claimed as novel is required.

Philippines

In the Philippines, an industrial design is defined as “any new or original creation relating to the ornamental features of shape configuration, form or combination thereof, of an article of manufacture, whether or not associated with lines, patterns or colors, which impact an aesthetic and pleasing appearance to the article.”

Philippine design practice allows for the use of multiple embodiments. However, it is important that the articles should be of substantially similar dominant design features that are embodied in a single design concept and relate to the same sub-class of the International classification or same set or composition of articles.

Singapore

Industrial designs or models in Singapore are defined as “the features of shape, configuration, pattern or ornament applied to an article by any industrial process.”
 
For national registration, Singapore requires designs be novel, but no examination as to novelty is conducted at the time of application. A statement of novelty is required and should be less than 500 words.

Thailand

In Thailand, protection can be obtained for “any configuration of a product or composition of lines or colours that gives a special appearance to a product and can be used as a pattern for a manufactured or handcrafted article.”

It is important to note that Thailand does not allow multiple embodiments in one application and there is no provision for filing a divisional application in Thailand. Hence, to validly obtain protection for several embodiments, they must be filed separately in the filing stage.

Vietnam

Industrial design patents “protect the outer appearance of a product represented by lines, three-dimensional forms or colors or a combination of these … and which may serve as a pattern for the manufacture of an industrial or handicraft product.”

All design filings must include views of all sides of the article and a perspective view.

Conclusion

Since design laws and practice varies between countries, it is important that everyone considering industrial design protection must be aware of the different requirements and work with their agents in each country to obtain the most efficient and cost effective route to registration.

 

 

Patents were first used as collateral to secure financing by Thomas Edison in the late 1880s. Edison used his patent for the incandescent electric light bulb as collateral to secure financing to start his company, the General Electric Company. Since Edison’s use of his patents as collateral, intellectual property has been used as collateral in the United States. Although the use of intellectual property as collateral did not gain popularity in the late 1800s with Edison’s use, it has become quite popular in recent years.

A patent is a right granted to the owner of an invention that prevents others, without the owner’s permission, from making, using, importing or selling the invention. A patentable invention includes a product or a process that gives a new technical solution to a problem, or a new method of doing things, the composition of a new product, or a technical improvement on how certain objects work. A patent has a term of 20 years from the date of filing, subject to the payment of annual renewal fees. One main thing to think about when using patents as collateral is the fact that patent protection is territorial. If filed and granted in Singapore, a patent is only enforceable within Singapore and therefore, the protection is only afforded to a patent owner within Singapore.

On April 8, 2014, Singapore announced details of a new financing scheme aimed at helping local businesses secure bank loans by using their patents as collateral. The Intellectual Property Office of Singapore (IPOS) is the agency that implements this scheme and hopes that this will spark the interest of local companies.

Companies interested in availing themselves of the scheme must be local enterprises incorporated in Singapore and use a granted patent as collateral. As part of the approval process, their patent will be valued by a member of an IPOS-appointed panel, which includes valuation companies, i.e. American Appraisal Singapore, Consor Intellectual Asset Management and Deloitte & Touche Financial Advisory Services. The panel will determine the worth of the patent to help banks decide on how much to lend. Three local banks – DBS, OCBC and UOB – are currently participating in the scheme.

This two-year plan by IPOS will involve the Singapore government sharing the default risk with participating banks. The banks will start accepting loan applications under this scheme from late second quarter of this year until April 2016. Interest ranging from 3.5% to 7.5% will be charged for loans of between one and six years. This rate is lower than the interest charged to smaller companies seeking unsecured loans, which is 8% to 10%.

IPOS chief executive Tan Yih San, during the scheme’s launch, said: “What we are (doing) is to work with the banks to recognise intangible assets, which is not quite something that is readily available in the loan market today.” He added that the scheme will open opportunities for companies to grow and expand not just locally, but overseas as well.

During the same event, Indranee Rajah, Senior Minister of State (Law and Education), said: “There is a growing trend of businesses being valued based on intangible assets. According to a report by Brand Finance, 42% of enterprise value in Singapore was in intangible assets in 2012, up from 35% in 2011. With IPOS’ new IP Financing Scheme, businesses can monetize their IP assets,” she added.

There are several advantages of using intellectual property as collateral.

One advantage is that intellectual property can be more secure than other forms of collateral. Most investors only invest in intellectual property that is receiving licensing royalties. The royalty payments are the ultimate source of cash that repay the loan. Hence, there is a consistent source of cash flow to repay the loan through licensing and, therefore, lower the risk of default. Another advantage is the increased return the owner of the intellectual property earns. Using intellectual property as collateral increases the owner’s return through increased leveraging. Many royalty streams are collected in one lump sum rather than over time, and this lump sum can then be invested in future or current projects that have a higher return than the cost of financing.

On the other hand, risk is the main disadvantage in using intellectual property as collateral. However, this can be minimized through proper loan structure.

As Singapore is increasingly becoming a technology-driven, knowledge-based economy, the use of intellectual property as collateral will become popular moving forward


In 2009, Fun Ranch Mega Development, Inc. (Fun Ranch) filed several trademark applications for a Facade of a Building for use on children’s entertainment and amusement center. The applications were rejected by the Examiner on the ground that the mark may not be registered because it does not function as a trademark and is not capable of distinguishing the goods or services.

On Appeal to the Director of Trademarks, Fun Ranch claimed that its mark is a unique design of a facade of a building that functions as a service mark. It argued that the mark is a visible sign that is distinctive of its business as proven by the fact that no other design similar to it belonging to a different recreational or amusement establishment was cited by the Examiner.

The Director of Trademarks denied the appeal, hence the case was elevated to the Director General of the Intellectual Property Office of the Philippines (IPOPHIL).

In its decision handed down in November 2013, the Director General stated that the function of a trademark is to point out distinctly the origin or ownership of the goods to which it is affixed; to secure to him, who has been instrumental in bringing into the market a superior article of merchandise, the fruit of his industry and skill; to assure the public that they are procuring the genuine article; to prevent fraud and imposition; and to protect the manufacturer against substitution and sale of an inferior and different article as his product. Significantly, a mark to be registered must be a visible sign capable of distinguishing the goods and services of an enterprise.

An examination of the subject applications shows the lack of a distinguishing feature that would make it a distinct "facade of a building" used by an enterprise for children’s entertainment and amusement center. This representation of a facade of a building does not function as an indicator of Fun Ranch’s business enterprise. In sum, Fun Ranch’s use of a unique facade of a building does not qualify for trademark registration.

This case demonstrates the importance of a trademark being a source identifier. Failure of a mark to function as such will result in disqualification for trademark registration.

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